Markets Brush Up Against Crucial Levels

Published August 1, 2011

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Following in the footsteps of the Dow, the S&P 500 touched the closely-watched 1300 level on Thursday for the first time in two years, but the broad index ended the day just below that threshold despite a late surprise from Microsoft.

Today's Markets

The Dow Jones Industrial Average rose 4.39 points, or 0.04%, to 11989.83, the Standard & Poor's 500 advanced 2.91 points, or 0.22%, to 1299.54 and the Nasdaq Composite jumped 15.78 points, or 0.58%, to 2755.28. The FOX 50 slid 0.09 points, or 0.01%, to 927.96.

The upbeat results overshadowed early concerns triggered by new data revealing initial jobless claims unexpectedly soared last week and durable goods orders took a surprise tumble in December.

However, Wall Street failed to hold onto the Microsoft pop, ending the day off its highs and below those key levels. Still, the S&P 500 landed in the green for the fifth session in a row and traded above 1300 for the first time since September 2, 2008 -- just days before the collapse of Lehman Brothers that cratered the economy. The index hasnâ€™t closed above 1300 since August 2008.

Likewise, the Dow flirted with closing above the 12000 threshold for the first time since June 2008, but was unable to do so for the second day in a row.

â€śThese are big psychological levels so weâ€™ll keep bumping into them. Having said that, when we get through them, weâ€™ll blast through them,â€ť said Jason Weisberg, NYSE trader and vice president of Seaport Securities.

Just over half of the Dowâ€™s 30 components closed in the green, led by Home Depot (NYSE:HD) and General Electric (NYSE:GE). The indexâ€™s weakest links were Procter & Gamble (NYSE:PG) and AT&T (NYSE:T), each of which reported sales misses. The benchmark index landed at its best level since June 2008.

The markets had already been encouraged by Caterpillar, which is seen as a good barometer for the global economy. Cat blew away estimates with a fourth-quarter profit of $1.47 a share on a 62% surge in sales. It also issued bullish EPS guidance for 2011.

Netflix surged to all-time highs after it beat the Street with a fourth-quarter profit of 87 cents a share and revealed it added more than 3 million subscribers. Qualcomm jumped 6% as its non-GAAP EPS of 82 cents and 25% jump in sales exceeded estimates.

The positive spin on the earnings front countered the cloudy economic picture painted by several mixed reports. The Labor Department said weekly jobless claims soared by 51,000 last week to 454,000. Economists had been bracing for a rise of just 1,000. However, the government warned that seasonal factors and the weather may have played a role.

At the same time, the Commerce Department said durable goods orders fell by 2.5% last month, as opposed to the 1.4% rise economists had been expecting. Durables, which measure demand for big-ticket items like refrigerators, are among the most volatile of all economic data and are often revised significantly in later reports.

Then again, housing stocks like Lowe's (NYSE:LOW) and Pulte (NYSE:PHM) landed on the fence after the National Association of Realtors said sales of previously-owned U.S. homes rose 2% in December, doubling estimates from economists.

Also, the Conference Board upped its December manufacturing index to 58.5 from 57 previously amid higher employment and new orders reads.

In the commodities complex, crude oil's selloff gained steam, with it settling down $1.69 a barrel, or 1.94%, to $85.64. Gold declined $14.60 a troy ounce, or 1.10%, to $1,318.40.

Corporate Movers

AT&T (NYSE:T) slumped 2% as its earnings beat of 55 cents a share was overshadowed by weaker-than-expected revenue of $31.36 billion and subscriber growth of 400,000.

Procter & Gamble (NYSE:PG) posted a non-GAAP profit of $1.13 that topped estimates, but also revealed sales of $21.3 billion that fell shy of expectations.

Sara Lee (NYSE:SLE) slumped 5% as Reuters reported the company is increasingly leading towards a split-up instead of a sale. A group of private-equity firms led by the Apollo Global has dropped out of the bidding and Brazil's JBS is still struggling to put together a more compelling bid, the wire service reported.

ProLogis (NYSE:PLD) rallied 8% after confirming it has entered into buyout talks with rival AMB Property (NYSE:AMB). The owner of warehouses and distribution centers said it is exploring a merger based on the unaffected trading prices of the companiesâ€™ stock before media reports broke.

Murphy Oil (NYSE:MUR) tumbled 10% a day after revealing a 45% tumble in fourth-quarter profits to 90 cents a share. Analysts had called for EPS of $1.02. Raymond James, BMO and Deutsche Bank all downgraded the stock in response.

Nokia (NYSE:NOK) slumped 1.5% as the world's largest mobile phone maker revealed a 16% decline in fourth-quarter profits and a disappointing outlook for the first quarter.

Altriaâ€™s (NYSE:MO) fourth-quarter profit jumped by an in-line 44% on stronger-than-expected sales of $5.9 billion. The maker of Marlboro cigarettes issued 2011 profit guidance that would top estimates.

Time Warner Cable (NYSE:TWC) grew its profits by 22% last quarter to $1.09 a share on a 5.9% increase in sales to $4.8 billion. Analysts had been calling for EPS of $1.01 on sales of $4.37 billion. The No. 2 U.S. cable operator also hiked its dividend by 20%.